§ 229.33 - Depositary bank's responsibility for returned checks and notices of nonpayment.

§ 229.33 Notice Depositary bank's responsibility for returned checks and notices of nonpayment.

Cross Reference

Link to an amendment published at 82 FR 27580, June 15, 2017.

(a) Requirement. If a paying bank determines not to pay a check in the amount of $2,500 or more, it shall provide notice of nonpayment such that the notice is received by the depositary bank by 4:00 p.m. (local time) on the second business day following the banking day on which the check was presented to the paying bank. If the day the paying bank is required to provide notice is not a banking day for the depositary bank, receipt of notice on the depositary bank's next banking day constitutes timely notice. Notice may be provided by any reasonable means, including the returned check, a writing (including a copy of the check), telephone, Fedwire, telex, or other form of telegraph.

(b) Content of notice. Notice must include the -

(1) Name and routing number of the paying bank;

(2) Name of the payee(s);

(3) Amount;

(4) Date of the indorsement of the depositary bank;

(5) Account number of the customer(s) of the depositary bank;

(6) Branch name or number of the depositary bank from its indorsement;

(7) Trace number associated with the indorsement of the depositary bank; and

(8) Reason for nonpayment.

The notice may include other information from the check that may be useful in identifying the check being returned and the customer, and, in the case of a written notice, must include the name and routing number of the depositary bank from its indorsement. If the paying bank is not sure of an item of information, it shall include the information required by this paragraph to the extent possible, and identify any item of information for which the bank is not sure of the accuracy.

(c) Acceptance of notice. The depositary bank shall accept notices

(a) Right to assert claim.

(1) A paying bank or returning bank may be liable to a depositary bank under § 229.38 for failing to return a check in an expeditious manner only if the depositary bank has arrangements in place such that the paying bank or returning bank could return a returned check to the depositary bank electronically, directly or indirectly, by commercially reasonable means.

(2) For purposes of paragraph (a)(1) of this section, the depositary bank that has asserted a claim has the burden of proof for demonstrating that the depositary bank's arrangements meet the standard of paragraph (a)(1).

(b) Acceptance of electronic returned checks and electronic notices of nonpayment. A depositary bank's agreement with the transferor bank governs the terms under which the depositary bank will accept electronic returned checks and electronic written notices of nonpayment.

(c) Acceptance of paper returned checks and paper notices of nonpayment.

(1) A depositary bank shall accept paper returned checks and paper notices of nonpayment during its banking day -

(i) At a location, if any, at which presentment of paper checks for forward collection is requested by the depositary bank; and

(ii)

(A) At a branch, head office, or other location consistent with the name and address of the bank in its indorsement on the check;

(B) If no address appears in the indorsement, at a branch or head office associated with the routing number of the bank in its indorsement on the check; or

(C) If no routing number or address appears in its indorsement on the check, at any branch or head office of the bank.

(2) A depositary bank may require that paper returned checks be separated from paper forward collection checks.

(d) Acceptance of oral notices of nonpayment. A depositary bank shall accept oral notices of nonpayment during its banking day -

(1)

Either at

At the telephone

or telegraph

number

of its return check unit

indicated in the indorsement

, or, if no such number appears in the indorsement or if the number is illegible, at the general purpose telephone or telegraph number of its head office or the branch indicated in the indorsement

; and

(2) At any other number held out by the bank for receipt of notice of nonpayment.

(e) Payment.

(1) A depositary bank shall pay the returning bank or paying bank returning the check to it for the amount of the check prior to the close of business on the depositary bank's banking day on which it received the check (“payment date”) by -

(i) Debit to an account of the depositary bank on the books of the returning bank or paying bank;

(ii) Cash;

(iii) Wire transfer; or

(iv) Any other form of payment acceptable to the returning bank or paying bank.

(2) The proceeds of the payment must be available to the returning bank or paying bank in cash or by credit to an account of the returning bank or paying bank on or as of the payment date. If the payment date is not a banking day for the returning bank or paying bank or the depositary bank is unable to make the payment on the payment date, payment shall be made by the next day that is a banking day for the returning bank or paying bank. These payments are final when made.

(f) Misrouted returned checks and

, in the case of written notice, as specified in § 229.32(a). (d

written notices of nonpayment. If a bank receives a returned check or written notice of nonpayment on the basis that it is the depositary bank, and the bank determines that it is not the depositary bank with respect to the check or notice, it shall either promptly send the returned check or notice to the depositary bank directly or by means of a returning bank agreeing to handle the returned check or notice, or send the check or notice back to the bank from which it was received.

(g) Charges. A depositary bank may not impose a charge for accepting and paying checks being returned to it.

(h) Notification to customer. If the depositary bank receives a returned check

or

, notice of nonpayment, or notice of recovery under § 229.35(b), it shall send or give notice to its customer of the facts by midnight of the banking day following the banking day on which it received the returned check, notice of nonpayment, or notice of recovery, or within a longer reasonable time.

(

e

i) Depositary bank without accounts. The requirements of this section with respect to notices of nonpayment do not apply to checks deposited in a depositary bank that does not maintain accounts.

[53 82 FR 1943327580, May 27, 1988, as amended at 69 FR 47311, Aug. 4, 2004June 15, 2017]